Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Support Departments Producing Departments Assembly Finishing $74,000 Direct overhead $41,000 Square footage 5,600 5,600 Number of receiving orders 1,700 1,500 Direct labor hours. 28,000 The company has decided Osimplify its method of allocating support service costs by switching to the direct method. General Factory Receiving $480,000 $190,000 360 2,800 Assembly Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values subsequent calculations. Allocation ratios: 42,000 Finishing

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
100%

Please answer in same format as picture attached, thanks.

Direct Method
Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments:
Support Departments
Producing Departments
Assembly Finishing
$41,000
5,600
1,700
28,000
42,000
The company has decided to simplify its method of allocating support service costs by switching to the direct method.
Direct overhead
Square footage
Number of receiving orders
Direct labor hours
Allocation ratios:
Square footage
Number of receiving orders
Allocations:
Required:
1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for
subsequent calculations.
General Factory
Receiving
Direct costs
General Factory Receiving
$480,000 $190,000
Total
360
Assembly
2,800
Assembly
Finishing
$74,000
5,600
1,500
Finishing
2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Transcribed Image Text:Direct Method Eilers Company has two producing departments and two support departments. The following budgeted data pertain to these four departments: Support Departments Producing Departments Assembly Finishing $41,000 5,600 1,700 28,000 42,000 The company has decided to simplify its method of allocating support service costs by switching to the direct method. Direct overhead Square footage Number of receiving orders Direct labor hours Allocation ratios: Square footage Number of receiving orders Allocations: Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. General Factory Receiving Direct costs General Factory Receiving $480,000 $190,000 Total 360 Assembly 2,800 Assembly Finishing $74,000 5,600 1,500 Finishing 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Required:
1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for
subsequent calculations.
Allocation ratios:
Square footage
Number of receiving orders
Allocations:
General Factory
Receiving
Direct costs
Total
Assembly
Assembly
Finishing
Assembly
Finishing
Finishing
$
2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.)
Overhead Rate
per direct labor hour
per direct labor hour
Transcribed Image Text:Required: 1. Allocate the costs of the support departments to the producing departments using the direct method. Round allocation ratios to four significant digits. Round allocated costs to the nearest dollar. Use the rounded values for subsequent calculations. Allocation ratios: Square footage Number of receiving orders Allocations: General Factory Receiving Direct costs Total Assembly Assembly Finishing Assembly Finishing Finishing $ 2. Using direct labor hours, compute departmental overhead rates. (Round to the nearest cent.) Overhead Rate per direct labor hour per direct labor hour
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Cost allocation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education